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The passage of federal climate legislation would affect the nation's energy infrastructure as profoundly as any policy of the past century.

If enacted in the form now being considered on Capitol Hill, state policymakers, utilities and industry leaders will see a host of challenges and opportunities as they redesign energy policies from the ground up to meet greenhouse gas reduction targets--transforming the way energy is generated, used and delivered.

Although it is impossible to predict with precision exactly how each region or state will be affected, some key factors will drive the new energy economy. These include the current mix of energy generation in different regions, availability of renewable resources, future cost of fossil fuels, and the success of carbon dioxide capture and storage technologies. It will also be affected by the need for utilities to earn a profit by meeting energy needs--whether they build new generation or reduce demand through energy efficiency.

One primary concern of state lawmakers is the potential for higher costs based on regional resources. Some states are coal dependent while others may have limited renewable resources.

For example, some legislators in Maryland, which has a renewable electricity standard and mandatory greenhouse gas reduction targets, worry federal laws may affect their ability to manage costs and meet goals.

"I want to see some consideration given to areas of the country that may not have the best alternatives for carbon-free generation," says Delegate Sally Jameson. "That's very important for those with fewer resources."

REVERSING A TREND

Many climate scientists believe an 80 percent reduction in global greenhouse gas emissions is necessary by 2050 to avoid the effects of catastrophic warming--flooding, drought, food and water supply disruption, and land loss from rising sea levels. In response to growing evidence that states may see significant economic losses, eight have set enforceable reduction targets. Congress, too, is considering a law requiring an 80 percent reduction in greenhouse gas emissions by 2050.

Carbon dioxide (C[O.sub.2]) is the most prominent greenhouse gas. And most C[O.sub.2] emissions come from the combustion of fossil fuel--for heating, electricity generation and transportation. An 80 percent reduction in greenhouse gas emissions will require greater energy efficiency, capture and storage of C[O.sub.2], and replacement of fossil fuels with low-carbon alternatives, such as renewable or nuclear energy.

The United States has been steadily increasing its reliance on fossil fuels since the industrial revolution, and its greenhouse gas emissions are growing as a result. It produces about 20 percent of the world's greenhouse gas emissions, while China produces about 21 percent. The European Union produces approximately 14 percent, and Russia, India and Japan around 5 percent each.

The U.S. Department of Energy forecasts the nation will use 12 percent more energy in 2030 than it does today, with much of it coming from fossil fuels. This estimate is based solely on policies that were in place by the spring of 2009. Most of the growth will come from the rising demand for electricity, expected to increase by 26 percent in 20 years. The growing population and rise in energy-hungry consumer items--such as large screen TVs, computers, game consoles and entertainment centers--will drive much of this increase.

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WHAT HAPPENS TO COAL?

A national cap-and-trade bill would put a price on emitting carbon by requiring power generators and large industrial sources to purchase emissions allowances. The number of allowances would be reduced every few years, which would drive up their price. This will gradually increase the cost of energy from fossil fuels and energy intensive products, leading consumers, businesses and utilities to use less energy and switch to low C[O. …

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